With Kirk Heffelmire
The national default rate on student loans continues to decline, even if modestly, according to the latest federal data. Mason’s rate inched up but continues to be lower than our state and national peers. Most importantly, when considering the financial need of our students, Mason remains Virginia’s greatest outlier (as reported here last year).
Student loan default rates are a good (inverse) measure of the economic value of a college education, as defaults often indicate that graduates aren’t earning enough in relation to the financial investment they made to pay for school.
As you can see in the chart below, default rates have generally improved over the past few cohorts for various university categories. The default rates for Mason students are consistently below the averages for the nation, Virginia, and even universities in the highest Carnegie classification of research activity (Mason was classified in the highest level of research activity for the first time this year).
Comparing default rates across institutions is however a bit trickier than it may seem given that about 90% of the variance in default rates among schools can be explained by the wealth of the students those schools serve (as measured by the ratio of their students qualifying for Pell Grants). In other words, the wealthier student families are to begin with, the more likely it is that the students will not have trouble paying back their loans upon graduation.
The chart below compares the default rate for students graduating in 2013 across public four-year institutions in Virginia against the proportion of students receiving Pell Grants in each institution between 2009 and 2013.
Once again, George Mason’s default rates are by far the lowest relative to what the composition of its student body would predict. Our students do far better financially upon graduation than their family wealth would predict. This is a good measure of the outstanding economic value associated with a Mason degree.